WASHINGTON
— Richard Cordray said yesterday that the new federal
consumer-protection
agency he heads will aim to make “sure that financial institutions are
playing
by the rules,” warning the industry that “there are real consequences”
for
violating the law.

The former
Ohio attorney general gave a speech at the Brookings Institution one
day after
President Barack Obama used a recess appointment to name him director
of the
Consumer Financial Protection Bureau. Cordray said he has “examiners on
the
ground today with broad authority” to inspect loan documents and ask
“tough
questions” of financial institutions.

“The
consumer bureau will make clear that there are real consequences to
breaking
the law,” Cordray said. “We have given informants and whistle-blowers
direct
access to us. We took over a number of investigations from other
agencies in
July, and we are pursuing some investigations jointly with them.”

By
outlining such a tough approach, Cordray is likely to win support from
consumers across the country. But his speech could send a shiver
through the
nation’s financial industry, which has looked with dread upon the new
bureau
with its broad regulatory authority.

Congress
created the bureau in 2010 when it approved a sweeping overhaul of the
nation’s
banking regulations. The new bureau will regulate a wide array of
consumer
financial products, such as home mortgages and credit-card offers,
while
encouraging financial institutions to write easy-to-understand terms.

Last
summer, Obama tapped Cordray to head the bureau, but Sen. Rob Portman
of Ohio
and 44 other Senate Republicans used a filibuster to block the
nomination last
month.

Portman and
other Republicans insisted they would oppose confirming any director
until
Obama agreed to modify the bureau’s powers. In particular, they wanted
Congress
to have the power to approve the bureau’s budget instead of it being
financed
by the Federal Reserve Board.

In an
appearance on Wednesday in Shaker Heights, Ohio, Obama used a recess
appointment to bypass the Senate. Cordray took the oath of office on
Wednesday
evening.

Because of
Obama’s move, Cordray said, “For the first time, we can exercise the
full
authorities granted to us under the new law. That is the specific
difference
that having a director makes.”

Cordray
said the bureau will immediately begin supervising what he called
nonbanks,
such as payday lenders, mortgage services, private student lenders and
“other
firms that often compete with banks but have largely escaped any
meaningful
federal oversight.”

Cordray
made clear his belief that the financial industry had a major role in
the 2008
collapse of the U.S. economy. He said that “hidden fees and exploding
interest
rates have infected more products and services. Novel and exotic
mortgages
battered housing markets and triggered the financial crisis that
wrecked the
economy and hurt millions.”